Buying your first house

Buying a new house is easy: Dive into some websites. Pick a house you like. Press “Add to Cart” and 10 minutes later you’re picking new furniture.

…Nah. Doesn’t work that way.

Like all pivotal decisions in life, the fun part is rarely the most important.

The best way to buy a home is to start answering the dull questions first.

Start by building a basic financial profile about yourself: First, pull your credit report and get your credit score. You can do this at freecreditreport.com or at other sites, such as creditkarma.com. If your score is under 620, you’ve got some work to do on your credit. Start by making absolutely sure every account is paid on time, every time, not one day late.

During your credit building period, make sure you don’t apply for loans on cars or anything else. Do everything you can to pay off any loans or credit cards you may have.

With a credit score of at least 620 in hand, start gathering documents that show how much money you make and what your expenses are. You’ll need pay stubs and a list of your bills.

You will also need cash.

A good rule to remember: The more cash you have, the better the terms of any deal you make. You’ll have more flexibility and loans will cost you less, especially if you also have a high credit score.

But how much is enough? Down payments vary depending on the type of loan. With an FHA loan, for example, you might need no more than 3.5 percent of the selling price. But you’ll also need some cash available for closing costs — maybe up to 2.5 percent or more.

One of the best places to start the process is with a lender. Gather your financial information and chat with your bank or credit union to find out how much house you could possibly afford. They will tell you how much cash you will need. Once you have the cash, get a pre-approval from your lender. Then the fun part begins. Visit some websites and find your best home.

Good idea: Start small with a home, buying one that is easy to afford with a short mortgage. Then, add some elbow grease to fix it up to increase its value, while paying off the mortgage. Soon, you’ll have value in the house and you can sell with more money to put down on your next house. This is the way wealth is built over time.